NIFTY10805.45  +13.90 (+0.13%)
SENSEX35962.93  +33.29 (+0.09%)
  • top gainers
  • top losers
  • top volume
  • top value
  • indian indices
  • global indices

FAQs

1. What is Margin Trade Funding Facility (MTF Facility)?

This is a product to facilitate funding of delivery based investments.

There are two clear cut benefits for the customers.

>Unlike NBFC or a bank, the client is freed from

> Extensive paper work

> Frequent pledging and un-pledging formalities.

> Frequent money transfer to and from the banks to save on interest cost due to varying needs from time to time.

> As per new SEBI regulation, a client is not allowed further exposure if the debit continues beyond fifth day of pay-in. However, MTF accounts are exempted from the requirement and hence customer gets much better flexibility.

Any individual or entity who is registered client of RWSPL can avail this facility. A client can activate MTF Facility in his existing active trading & demat account with POA in favor of RWSPL or open a new trading & demat account for the purpose.

No. As per SEBI guideline a client can avail MTF facility only from one broker. The client has to give undertaking that he is not availing MTF facility with any broker.

If client is availing MTF facility with Broker A and wishes to avail MTF facility through other RWSPL, the client has to close his MTF facility account with Broker A and provide a NOC (from Broker A) to RWSPL along with the registration documents.

MTF trading account RxxxxF (same code with suffix F)
Regular trading account Account code: Rxxxx
MTF trading account Can trade only in BSE Cash & NSE Cash
Regular trading account Can trade in BSE Cash, NSE Cash, NSE FO and NSE CDS
MTF trading account Can trade only in limited permissibleequity shares (around 1100) as per SEBI guidelines
Regular trading account Can trade in any securities of your choice
MTF trading account Margin will be higher at VaR + 3.5 or 5.5 ELM (effectively 25% to 45%)
Regular trading account Margin will be lower at VaR+ELM or 20% whichever is higher (effectively 20% to 30%)
MTF trading account Can continue debit beyond 5 days of pay-in
Regular trading account Account will be locked for further exposure if debit continues beyond 5 days of pay-in
MTF trading account GST will not be charged on interest
Regular trading account GST will be charged on delayed payment charges
MTF trading account Trades will have to be executed on ODIN under product type MTF
Regular trading account Trades will have to be executed on ODIN under product type Margin or Delivery
MTF trading account Your holding in MTF can be seen under Net Position in ODIN
Regular trading account Your holding in regular account can be seen under Holding in ODIN

Please note that limits and corresponding exposure set in one type of account cannot be used against other.

In cash segment any purchase to be settled by delivery. 100% of the value of purchased securities is blocked from cash balance in the client’s account.

On the other hand, in a margin order, 100% of the purchase value is blocked from your limit set against your collateral initial margin deposit.

In other words in cash segment the client buys shares entirely from his own funds, whereas in MTF Facility the client has to partially fund his purchases and balance fund will be provided by RWSPL.

If you are to execute trades under MTF, while punching order in your normal client code, you should select MTF producttype in the order entry form.

No there is no separate tariff for MTF Facility. Tariff charges opted by you for your normal account will be also be applicable for all trades including MTF Trades.

Yes. You can buy shares against additional funds transferred by you in your account. However this will be restricted to the permissible shares only.

No. You cannot place short sell orders under MTF facility for shares not held in DP with RWSPL.

No. Only Permissible Equity Share in demat that are classified as 'Group I security' as defined in SEBI from time to time can be purchased through MTF Facility.

Equity Share in demat that are classified as 'Group I security' as defined in SEBI Master circular No. SEBI/HO/MRD/DP/CIR/P/2016/135 dated December 16, 2016, Chapter 4, shall be eligible for margin trading facility.

This list is subject change from time to time as per guidelines from SEBI & exchanges.

In addition to the above, all the equity shares which are offered in the Initial Public Offerings (IPOs) and which meet the conditions for inclusion in the derivatives segment of the Stock Exchanges would be eligible for Margin Trading Facility.

RWSPL reserves the right to stock selection for MTF Facility and may at its sole discretion, include or exclude any shares from the list on any exchange without any prior intimation.

Shares shall have to be transferred to RWSPL, either directly from other demat account or through demat account with RWSPL. RWSPL has POA to move your share to the collateral account specially created for MTF.

As per SEBI guidelines, broker will have to collect margin at the rate of VaR + 3.5 or 5.5 ELM. This effectively means that 25% to 45% margin is required to be collected depending on the stock. Hence one can assume that one will get 2 to 4 times limit for MTF.

“Initial margin” means the minimum amount, calculated as a percentage of the transaction value, to be placed / maintained by the client, with the broker, before the actual purchase.

Initial margin deposit can be in all or any one form of collateral security as follows

>By depositing cheque in your margin trading account withRWSPL.

> Fixed deposits with banks with lien in favor ofRWSPL.

> Bank Guarantees assigned in favor of RWSPL.

> Equity Share in demat that are permissible for the MTF facility.

The value shares provided as collateral security shall be determined after deducting the share-specific risk value from the market value. Share specific risk value is the sum of the below four components, calculated on real time basis.

> Value at Risk (VAR), for the respective share, as prescribed from time to time basis, by exchanges on real time.

> Extreme Loss Margin (ELM), for the respective share, as prescribed by exchanges from time to time basis as follows.

For “Group I stocks” available in the F & O Segment - 3 times of applicable ELM.

For “Group I stocks” other than F&O stocks - 5 times of applicable ELM.

> Additional margin component, for the respective share, as prescribed by RWSPL from time to time.

> Any additional margin prescribed by exchanges or SEBI, from time to time.

The value shares provided as funded security shall be determined after deducting the share-specific risk value from the market value. Share specific risk value is the sum of the below three components, calculated on real time basis.

> Value at Risk (VAR), for the respective share, as prescribed from time to time basis, by exchanges on real time.

> Extreme Loss Margin (ELM), for the respective share, as prescribed by exchanges from time to time.

> Additional margin component, for the respective share, as prescribed by RWSPL from time to time.

> Any additional margin prescribed by exchanges or SEBI from time to time.

No. The clients will not be permitted to trading in equity & currency F&O segment. Trading in Cash segment only will be permitted from account under MTF facility. However he can trade in F&O segment using is regular trading account.

Interest rate @ 18% p.a. with monthly rest will be applicable for MTF Facility and will be debited to your MTF account on monthly basis. But the rate is subject to change as per the market practice or in case of change in a risk mitigation measures at the discretion of RWSPL.

No. You shall be charged interest only on the net consolidated outstanding balance (MTF Account + Normal account) arrived on daily basis at the time of computation of monthly interest.

No. As per SEBI guidelines, no exposure can be provided against the value of funded stocks (shares purchased under the MTF Facility).

Yes. You can shift the trades from MTF to Normal trade and vice versa

During the day, from MTF to Normal trade and vice versa, from the trading terminal itself, with in the market hour for the day using facility given on ODIN

After market hours, you will have to execute fresh reversal MTF trade, and execute fresh trades in normal and vice versa. This can be done as and when you wish to shift the position.

The entire portfolio under MTF Facility(Collateral Stocks plus the Funded Stocks) shall be valued at market rates on real time basis.

At the end of day mark-to-market profit loss of the portfolio shall be debited or credited to the client’s account.

After purchasing the stocks, maintenance margin is required. This maintenance margin is the minimum amount that a client has to maintain with the broker. In case the margin falls below the limit, margin calls are made thereafter if the shortage falls below liquidation margin the funded stocksmay be liquidated. The stages and steps to be taken at each stage at RWSPL are as below.

Margin Shortage Level Up to 10 % of Margin required
Action No action
Margin Shortage Level Above 10 % of Margin required
ActionMargin Call
Margin Shortage Level Above 30 % of Margin required
Action Liquidation of Stocks

Collateral: In case of rise in the value of the shares RWSPL have option of granting further exposure on excess collaterals.

Funded Stock: No such exposure shall be permitted on the increased value of funded stocks.

If any corporate action is announced on any shares held (Collateral Stocks and the Funded Stocks) the holding shall be re-adjusted accordingly. Any dividend announced against the shares shall be credited to your trading account as and when received.

No. SEBI regulation does allow this.

The collateral and funded shares and fund pay out from my MTF Account will be kept ‘On Hold’ by system and shall be released only after all the obligations are fulfilled towards the MTF facility.

As per SEBI guidelines, to brokers are allowed to provide this facility to its customer only for the purpose of investment and trading. Hence a customer cannot withdraw cash against the shares given as collateral. However, if the customer desire to withdraw fund, to the extent of excess credit balance in the account, he/she can issue payout instruction to broker to that extent.

Clients desirous of registering for MTF Facility are required to open a regular trading account and demat account with POA in favor of RWSPL and complete and provide the additional documents given below.Download > MTF Application Form.

> Application cum Undertaking for MTF Facility

> Information Document - Margin Trading Facility

> Authorization Letter for offer of collateral

> Rights & Obligations

On receipt of the complete application form the facility will be activated in 1 day.

No movement of funds or collaterals/stocks will be permitted during the market trading hours.

You have to give a specific request. Your request will be processed at the end of the day and will be accepted only if there is sufficient excess funds or collaterals/stocks after meeting all the obligations in the respective account.

Yes. The benefit will be restricted only to cover the margin shortage in either account.

However this will be carried out at the end of day after day’s processing is done and only if there is sufficient value of excess fund or collaterals/stocks after meeting all obligations for Normal account to my MTF account independently.

The required fund or collaterals/stocks will be moved from MTF account to Normal account and visa versa as applicable. The independent margins as well as the exposure limits in both the accounts will stand amended accordingly for trading on the next day.

If there is no activity in your MTF account for more than 90 days, all open position has to be liquidated and funding will have to be settled.

The funding arrangement for such stock will have to be settled and nullified immediately either by liquidation of such stock or repayment of the outstanding funded amount against such stock.